October 17, 2021

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Assignment of Benefits Valid Only If All Policyholders and the Mortgagee Agree

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A second court of appeals in Florida has upheld a limitation in a policy that prevents assignments of property insurance claim benefits only if all policyholders and the mortgagee agree to the assignment.

The Third District Court of Appeal made a quick finding for the insurance company stating:

Affirmed. See Restoration 1 of Port St. Lucie v. Ark Royal Ins. Co., 255 So. 3d 344, 348 (Fla. 4th DCA 2018) (holding that a provision of a property insurance policy requiring the consent of all insureds and the mortgagee before the insureds’ rights may be assigned is enforceable).1

The Florida Supreme Court was going to review the Restoration 1 case cited above but then dismissed its review of that case, noting the change of Florida law regarding assignments:

Subsequent to this Court accepting jurisdiction, the Legislature passed, and the Governor approved, ‘[a]n act relating to insurance assignment agreements.’ See ch. 2019-57, Laws of Fla. Section 1 of the act creates new section 627.7152, Florida Statutes, titled ‘Assignment agreements,’ that among other things defines the term ‘assignment agreement’ and sets forth certain requirements for an assignment agreement to be valid and enforceable. Ch. 2019-57, § 1, Laws of Fla. Section 2 of the act creates new section 627.7153, Florida Statutes, titled ‘Policies restricting assignment of post-loss benefits under a property insurance policy,’ that among other things permits an insurer to ‘make available a policy that restricts in whole or in part an insured’s right to execute an assignment agreement’ if certain conditions are met. Ch. 2019-57, § 2, Laws of Fla. The act has an effective date of July 1, 2019. Id. § 6.2

The bottom line is that these types of clauses within insurance policies will become much more common as insurers attempt to restrict assignment of benefits from policyholders to contractors.

Thought For The Day

The road to success is always under construction.
—Arnold Palmer
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1 All Insurance Restoration Services v. Olympus Ins. Co., No. 3D-0186 (Fla. 3d DCA Sept. 22, 2021).
2 Restoration 1 of Port St. Lucie v. Ark Royal Ins. Co., No SC18-1624 (Fla. July 29, 2019).

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